468 Retail and Channel Management Blog

Monday, January 31, 2011

Giant retailer to infiltrate inner-city ‘deserts’

As previously mentioned, Wal-Mart is expanding but it is not only with Supercentres to the suburbs of Canada.

Wal-Mart plans build 50 stores in U.S. urban neighborhoods, starting with Chicago. President and CEO of the U.S. division Bill Simon said “No family should have to choose between food that is healthier for them and food they can afford.” Other cities being considered include: Detroit, Houston and Philadelphia.

The new locations will be in densely populated city neighborhoods, where household incomes are low and crime is high. These areas, often called “food deserts”, are neighborhoods with no place to buy the recommended foods for a healthy diet; many fast food and convenience stores instead of traditional grocery stores.

The move will increase access and convenience to healthy and unprocessed foods. The new stores will also work on job creation and economic improvement in the neighborhoods by creating 15,000 to 20,000 jobs country wide and having special programs to benefit local businesses.

The high density of the city neighborhoods make for an ideal market. Even though residents of some urban neighborhoods may be poor, by focusing on its core retail value proposition Wal-Mart will bring selection and convenience to these ‘food deserts’ and capitalize on their considerable buying power by being low priced. When choosing other sites, Wal-Mart should follow the General Location Decision Process to ensure they are conveniently located to the largest potential market.

The move to increase availability in the inner city coincides with Wal-Mart’s plan to make thousands of its packaged foods lower in unhealthy salts, fats and sugars, and to drop prices on fruits and vegetables. These moves are supported by the first lady Michelle Obama, who is trying to combat childhood obesity and believes Wal-Mart has “the potential to transform the marketplace and help Americans put healthier foods on their tables every single day.”

Not everyone is convinced that Wal-Mart should be allowed in low-income neighborhoods. Critics say Wal-Mart has a devastating effect on communities since small merchants cannot compete with Wal-Mart's prices and that the company pays too little while charging too much for health insurance. Wal-Mart has also been blamed for focusing on low-cost products forcing the outsourcing of American manufacturing jobs to other countries, helping to creating the some of the lower income neighborhoods it is planning to move into.

As the largest grocer in the United States, Wal-Mart may be the only company with the ability to move into these areas. For all the problems and downfalls of the company, this is a positive move that will be positive to many lower class people and their communities. The high density and a lack of competition in the chosen locations will make for lots of traffic for the stores resulting in high profitability. By focusing on selection and convenience once the stores are built, Wal-Mart will be able to serve high volumes of customers which will make up for their lower incomes. I may not agree with many things that Wal-Mart does, but this is one time where the retail giant seems to be have aligned its own interest and helping others in a profoundly beneficial way.

Sources

http://www.walmart.com/

http://www.truth-out.org/article/wal-mart-targeting-inner-city-buildup

http://economy.kansascity.com/?q=node/9572

http://www.edmontonjournal.com/story_print.html?id=4142964&sponsor=

Sunday, January 30, 2011

The Year of Golden Opportunity

These days almost everyone is jumping in on the cell phone boat. With new advances like smart phones and apps, telecommunication retailers are becoming aggressively competitive.  With the retail environment constantly changing and bringing in competition it’s no wonder that many retailers are jumping in on new opportunities to expand. West Edmonton Mall is playing a huge part in getting new retailers to Edmonton. 

On January 29th 2011 Times Telecom opened its new retail outlet to the public. Using clever marketing attractions, Times Telecom took advantage of the Chinese New Year (year of the golden rabbit) to attract customers to their grand opening. Times Telecom sprung into action and planned out a fantastic customer experience for their grand opening on Saturday. They offered amazing prizes and provided marvelous and stunning entertainment. “We are bringing the Chinese Tradition in celebrating the Lunar New Year with games and entertainment,”[1] said Mr. Terry Bahar, who is the vice president of operations for Times Telecom. “Aside from that, a game of chance to win $68,000 for the grand prize raffle draw, a Sweet 16 game and several valuable prizes like mobile phones, accessories, cash prizes, entertainment, and of course a lion dance.”[1]

Among other giveaways Times Telecom is teaming up with Bell Mobility for some terrific offers such as: free phones, accessory discounts and in-store credits.

I think this is such a clever and innovative way to help bring customer attraction to a new retail location opening. On Saturday I witnessed the craze that Times Telecom created with their grand opening. It attracted a large amount of people and West Edmonton Mall was busier than ever. Large groups of people gathered to see promotions and get their two cents on Times Telecom and what they can offer. This marvelous event ran from 1 to 4pm and Times Telecom embraced the masses that showed up to enjoy the occasion.  

With their remarkable first impression Times Telecom is hopeful in the future that they will have great success in their West Edmonton Mall location.  They’ll have to keep up with the main competition. They already offer guarantees on excellent cell phone deals and long distance communication services. This highlights their focus on a wide selection of services and products at a descent price.

I think Times Telecom’s future in their new location is bright. Times Telecom’s expansion knows no limits, after all they are one of the fastest growing companies. “Times Telecom was listed on the list of the top 100 fastest growing companies in British Columbia by Business in Vancouver (BIV) for the years 2008, 2009 and 2010.”[1]


References

[1] http://news.yahoo.com/s/prweb/20110122/bs_prweb/prweb4992724

[2]  http://www.timestelecom.ca/en/Support/Default.aspx

The Emergence of Proximity Marketing

Within the last few years retailers have had to redesign their retail format in regards to the customer shopping experience. Retailers have needed to adapt to innovative formats to meet their customer’s preferences because of the influence of technology in today’s age.

Examples include

· *Virtual online stores and sites such as ebay.com have exploded and have been very successful.

· *Technology has enabled multi channel retailing where customers can order products on company websites for pick up at store locations or ordered online from the store itself on kiosks.

· *The adoption of RFID or radio frequency identification has become very prevalent across retailer inventories.

· *Emergence of self checkout at places such as Walmart.

Now the emergence of mobile apps has created a hype for retailers to enhance customers shopping experiences through the latest trend known as “Proximity Marketing”. Proximity marketing allows retailers to send messages directly to consumers phones by detecting their presence within up to 300ft and provides them with the opportunity to find sales, coupons, job offerings, store promotions, and other rich media directly to shoppers mobile phones.


I believe this is an amazing opportunity for retailers to enhance their retail value proposition in regards to their customer experience and convenience. Retailers not only need to understand how many customers they can get into the store but also how it is to be done and the extra services they can offer to get them into a store. This shopping experience would allow unique and interactive customer service and is worth putting the time into as a recent study conducted by IBM found that 72% of consumers are more likely to take action after receiving a message while "on location". Mobile is growing and is everywhere now as the “average American spends nearly three hours a day on their mobile phone.” This proves that it will only be a matter of time for customers to learn about and use proximity marketing on a daily basis and truly enjoy the interactive customer service.


Convenience is also another huge factor with regards to a retailer’s value proposition as customer’s value relevant information that saves time and effort and is also easy to find and get out of. Proximity marketing can enhance both the customer experience and convenience by providing relevant and targeted content as well as information on promotions prior to the point of sale.


Challenges have arisen for retailers planning on developing mobile apps for customers. President of Vision State John Putters discussed the challenges of conversion rates for retailers as well as the return on investment from designing these applications as many customers only use an app four times and then never use it again. The challenge retailers must work on is to encourage repeated use and think about the functionality of the app to meet user expectations rather than the speed at which it enters the market.


It will take time but I strongly believe that if retailers take their time in creating a well designed application to enhance their retail value proposition by emphasizing the customers shopping experience and convenience that retailers will be successful as there is a huge market and growth potential for these applications as we have seen with the emergence of internet retailers, RFID technology etc... Proximity marketing will allow for this as it is done in real time where retailers will be able to manage operations quickly to improve the effectiveness of their campaigns in both the short and long term.


References

John Putters President of VisionState- Guest Speaker

Mark 468 Retail and Channel Management course pack

http://www.digitaljournal.com/pr/196533

http://www.digitaljournal.com/pr/196533#ixzz1CYJW3KP4

http://www.digitaljournal.com/pr/196533#ixzz1CYIHWOUf

Saturday, January 29, 2011

A Beautiful Experience in One Stop

On June 24, 2010, West Edmonton Mall became home to Murale, a chic beauty store with extensive selection, a rewarding loyalty card, one-stop convenience, and the promise of a luxurious experience. This store may just be the entire package in beauty care.

The Edmonton location consists of a wide-open two-story layout with very bright lighting, ideal for finding that perfect match to your skin tone. The upscale prices are matched by the upscale selection of products offered, but since Murale is owned and operated by the Shoppers Drug Mart Corporation, customers have the benefit of being able to use their Shoppers Optimum card to earn points towards discounts and free products. While this may sound much like Sephora’s Beauty Insider Card, it is worth mentioning that Murale often has reward card promotions such as 15,000 bonus points with the purchase of $50.00 or more, and the points are of course redeemable at Shoppers Drug Mart and Murale.1 To me, this sounds like a better deal than collecting points at Sephora to work towards free samples. If you are going to spend high prices on products that are not meant to last forever, high future savings are very desirable.

What sets Murale apart most from its competitors is the experience and convenience. Although West Edmonton Mall may be out of the way for some shoppers, the convenience of the store lies in the variety of services and products available, truly giving Murale the potential to be “an express [shop] for any busy beauty lover”.2 The store offers services such as the Marc Anthony Blow Dry Bar where you can have your hair blown out (in less than 35 minutes) into various styles such as “The Glamour Girl” or “The Flirt”, and the Benefit Brow Bar where you can have your eyebrows shaped in store. But it doesn’t end there. Customers can also enjoy mini facials, makeup application, and express nail polish changes, proving that experience and convenience go hand-in-hand and holding Murale true to their promise of “a beauty shopping experience like no other in the world”. 3 This sounds like any beauty enthusiast’s dream come true.

With all this to offer, what is the problem? Stores like Sephora and Beauty Junkie have already made their mark on shoppers at West Edmonton Mall. On a recent trip to the mall, I couldn’t help but notice the crowd of people in Sephora and the single customer in the Murale store just across the hall—and many people I have talked to haven’t even heard of the store! Yes, Murale offers “access to global beauty brands and an elevated level of beauty expertise,”4 but shoppers seem quite content with quite the same (perhaps even less) selection of products from other stores, a little less expertise, and a slightly less extravagant experience. What Murale needs is more recognition as a beauty store that provides customers with a luxurious and unbeatable beauty experience. When that happens, the competition may have to watch out!



[1] http://forums.redflagdeals.com/coupon-murale-get-20-000-shoppers-optimum-points-min-50-purchase-ymmv-980835/

[2] http://www.murale.ca/ecms.ashx/Pressreleases/PR-MuraleOpeningWestEdmontonMall.pdf

[3] http://www.wem.ca/#/store-directory-maps/health-beauty-care/murale

[4] http://www.murale.ca/ecms.ashx/Pressreleases/PR-MuraleOpeningWestEdmontonMall.pdf

The Game is On!

A good retailer knows the competition is never off the table.

Just ask Mr. Rosen, of Harry Rosen, who spends 80 days a year checking out his competition around the world, so that he is always prepared for those foreign rivals. As he says, “there are no surprises.” A sign of a good business man. Despite the arrival of a U.S competitor, Brooks Brothers, Mr. Rosen continues to project sales growth within his stores. He does so by focusing on a niche market, providing Canadian brands within his stores, and supplying what is demanded by the customers.


Such is not the happy case with all retailers. Fairweather, has been recently dropped as a tenant from one of Canada’s largest shopping centers in Toronto. The reason? To make room for the arrival of foreign retailers. And the bad news continues for Canadian retailers. Just look at Zeller’s, who had several stores bought out by Target in a $1.8 billion dollar deal. Anyone who has frequented a Fairweather or Zeller stores lately can attest to the fact that the selection is bleak and the store is quite empty. Not a winning formula.


But why are the foreign competitors so interested in making their way into Canada? A stronger economic climate, lower unemployment and a less competitive retailing sector. According to ICSC data, Canadian mall merchants boast $568 per square foot of sales, compared to their U.S. counterparts who earn 45% less.


We can see the competition intensifying all around us. Look at West Edmonton Mall. Over the past several years, they have welcomed several foreign retailers. I don’t know about you, but I love it! So much more selection. A different and better experience. At the end of the day, that’s all that matters to a consumer.

Let this be a warning to Canadian retailers like Fairweather—the game is on. While consumers will try to be patriotic and shop at Canadian stores, if prices or selection or convenience is better elsewhere, they won’t look back.


Keep your eyes open for these up and coming retailers in Canada: Target, J.Crew, Zumiez, Express, and Marshalls. There is also a chance we might see retailers such as Kohl’s, J.C.Penny, Saks Off 5th and Nordstrom. There also are the ever-popular and expanding retailers like Victoria Secret, H&M and Apple Inc.


Sounds like the selection of retailers for Canadians just got better.


Sources:

http://www.ctv.ca/generic/generated/static/business/article1887056.html

http://www.fairweather.ca/

Thursday, January 27, 2011

Un Succès Bien Nourri!



Un Succès Bien Nourri!

The ever-famous Cora Breakfast and Lunch has finally moved its way to the Edmonton area and is growing rapidly! This friendly family restaurant, which was once called Chez Cora Déjeuners, began in 1987 in Montreal, Quebec, Canada by a self-made businesswoman named Cora Tsouflidou. Edmonton received its first Cora franchise in October, 2009, and currently has three locations in Edmonton and one in Sherwood Park, contributing to the 121 store locations throughout Canada. Recent news have said that they are hoping to open four more restaurants in the Edmonton area in 2011, which will be located in St. Alberta, Leduc, the Oliver area near downtown Edmonton and Whyte Ave.
Cora’s retail value proposition is focused on selection, experience, and price. Specializing in unique and creative breakfast and lunches, Cora’s menu selection is huge and has something for everyone; even the picky eaters will find something mouth-watering. You can order anything from fruit to eggs to crepes to pancakes to waffles – the list never ends. Cora, the owner, shows her true character by naming each recipe through anecdotal history and stories that she now shares with the customers, such as Julia’s Delight, 90’s Harvest and Rosemary’s Sunday. With the exceptional food presentation, the casual atmosphere and friendly staff, this hip place is a memorable experience for seniors, adults and kids too. The bright colored walls are covered with original graphic designs, created by Cora herself; a lot of the pictures are quite humorous. This brings an energetic and cheerful presence, especially with the bright lighting. The restaurant layout is used very well, incorporating as much seating as possible but allowing a clean open area to make the room feel spacious and fresh. Although the lines are sometimes very long, it is definitely worth the wait! Prices are reasonable for the quality and portions that one will receive during their visit. The kitchen is open, allowing the customers to see all the fresh fruit and production lines, enhancing the friendly ambiance.
With the announcement of four new locations in the Edmonton area, Cora’s hope to make convenience more of an important factor in their business.The opening of four new locations in the Edmonton area will be a great opportunity for Cora to expand franchises due to increasing popularity. It will be more convenient for the public to access this trendy franchise and greatly reduce the waiting lines of the current high demand locations. David Polny, Cora’s Executive Vice President said, “It may seem that it’s all of a sudden a boom, but we’ve been planning this for three years. The No. 1 complaints that we get? I can’t get into our store so that tells us we’re ready to go”. The current locations they are looking to expand are situated accordingly to the large trade areas that have high demand for such a franchise, accessibility to all ages and in return will help Cora promote brand awareness. This is exactly what the Edmonton area needs!

… And as they all say, breakfast is the most important meal of the day!

Sources:

Canada Target-ed

The concept of an upscale discounter seems like an oxymoron to most, but it’s the concept that has led Target Corp. to become the second largest discounter behind Wal-Mart in the U.S. Now Target is bringing their “cheap-chic” to Canada following their $1.8B purchase of 220 of the 279 Zellers store from Hudson’s Bay Co; a considerably higher price tag than the $1.1B Richard Baker bought the HBC enterprise for in 2008. Although the Target brand is recognized by 70% of Canadians and 10% of Canadians have visited a Target store in the U.S. in the last 12 months, Canadians are eager to see how Target will fare on the Canadian market against Canadian Tire, Shoppers, Loblaw’s and most of all Wal-Mart Canada.1

To understand how Target intends to compete on the Canadian competitive landscape we’ll need to understand their retail value proposition (RVP) but first let’s look at how Target’s number #1 U.S. competitor, Wal-Mart has been so successful in Canada. First, consider how Wal-Mart has delivered value to its customers in terms of RVP. Wal-Mart only stocks high volume items limiting selection and the experience is not predominantly memorable (spare the Greeters). Wal-Mart is not particularly convenient, often locating their store on the outer limits of the city to reduce real estate costs. The company then keeps their RVP at a competitive, if not higher, level by keeping the price denominator so low. When it comes down to it, Wal-Mart has been able to deliver value to Canadian customers primarily, if not solely on price. Canadians have responded well to Wal-Mart’s RVP propelling it into the top four retailers in Canada.3

Target Corp. has taken the other approach by focusing on the numerator of the RVP model. Target has earned the faux French nickname “Tar-jay”, by focusing on a higher end designer selection over other discounters. Target’s advantage will also stem from the store spaces that the company has acquired from Zellers; they are much more central in terms of location and more convenient to visit than those of Wal-Mart. What’s interesting is that Target promises to match Wal-Mart’s price on any like item, but Target carries a higher end selection which comes with a higher, although discounted, price. Target’s RVP will come from offering the customer while attempting to maintain a discounted price.

With a large portion of Zellers stores located in older retail spaces, Ken Wong a marketing professor at Queen’s University School of Business says landlords are excited the idea of target rejuvenating older malls with renovations. 2 However, with Target only planning to renovate 100 to 150 of the 220 stores they’ve acquired Edmontonians are curious as to where they will need to travel to find the big red bull’s-eye two years from now. There is of course Zellers locations at the West Edmonton Mall, Abbotsfield, Westmount, Calgary Trail, Bonnie Doon, Northwood, Kingsway Mall, Meadowlark Mall, Millwoods Town Centre, Northwood, but it unlikely that Target will renovate all these locations into Target department stores.

We can assume that West Edmonton Mall, Calgary Trail, and Westmount will be become Target store because of their large trade area. While the future is unsure for many of these other locations the Abbotsfield location makes an interest case. Although the Beverley area is located conveniently between the Capilano and Clairview Wal-Mart, the area is not comprised of the typical patrons Target experience in the U.S. Target customers are slightly different than those of Walmart. For starters Target customers have income closer to $63K, in contrast to Walmart’s customers whose income is less than $53K. Target’s customers are also more affluent and 48% have college degrees.1 Although this area’s demographics may not fit the typical U.S. Target customer, it fits the sleepy old mall location that Canadians hope Target will breathe life into with its entrance into Canada. In my opinion, the woes of old mall landlords will continue as Target will be very selective choosing which locations it will renovate. A likely and unfortunate scenario will have old mall landlords lose both a tenant and their Zellers anchor store.

-Spencer Norris

1http://edmonton.ctv.ca/servlet/an/local/CTVNews/20110113/target-canada-110113/20110113/?hub=EdmontonHome

2http://www.financialpost.com/news/Target+Canada/4106808/story.html

3http://www.portal.euromonitor.com.login.ezproxy.library.ualberta.ca/Portal/Statistics.aspx